Years ago, I found myself sitting in law school in Moot Court wearing an oversized itchy blue suit. It was a horrible experience. In a desperate attempt to avoid anything like that in the future I enrolled in a tax course. I loved it. I signed up for another. Before I knew it, in addition to my JD, I had a LL.M Taxation. I needed only to don my cape…. taxgirl® was born. Today, I live and work in Philadelphia, PA, one of the best cities in the world (I can't even complain about the sports teams these days). I landed in the City of Brotherly Love by way of Temple University School of Law. While at law school, I interned at the estates attorney division of the IRS. At IRS, I participated in the review and audit of federal estate tax returns. I even took the lead on a successful audit. At audit, opposing counsel read my report, looked at his file and said, “Gentlemen, she’s exactly right.” I nearly fainted. It was a short jump from there to practicing, teaching, writing and breathing tax.

Olympians Get a Free Pass on Taxes at the London Games

Okay, best part of the 2012 Olympics so far? I say David Beckham in a speedboat because David Beckham in anything is always going to win. My kids say the giant Voldemort puppet because, well, puppets.

But the Olympians? I’m guessing it’s a toss-up between marching in the opening ceremonies and the giant tax bill that they’re not going to be paying.

Yes, you read that correctly. Olympians at the games are getting a nice tax break under an exemption passed just for the London 2012 games. If not for the exemption, those at the games might have to pony up some pounds for the Queen.

You see, the Brits, like the U.S., have a tax system that attempts to tax global income. Under British tax law, the amount of tax due is pro-rated based on the number of events that an athlete competes in inside the country; this is in addition to a 50% tax rate on appearance fees. If, for example, an athlete participates in ten athletics events in 2012 and one of those events is located in the UK, the Brits take the position that they are more or less entitled to 1/10 of that athlete’s worldwide income (some exceptions apply but you get the idea). The tax is imposed even though the athletes may not live in Britain.

The law has kept big names like Spanish golfer Sergio “El Nino” Garcia and Rafael Nadal out of the country for a number of events. Those omissions made sports news but didn’t make many waves beyond their individual sports. The Olympics, however, is on a completely different scale: you can’t have a competitive Olympics unless athletes from all over the world actually show up – and attendance was threatened by these tax laws. Last year, Jamaican über sprinter Usain Bolt famously declared “I am definitely not going to run [in London]” until the Olympics because of what he viewed as punitive tax laws. His declaration sent the country into a tizzy, worrying that other athletes might make similar proclamations – or not show up for the 2012 Olympics at all.

In order to stem any controversy, the British taxing authorities agreed to a limited exemption to the tax rule. The exemption covers those athletes who are visiting the UK in order to compete in the Olympic Games and a limited number of people who are visiting the UK to work on Games-related activity. It does not apply to those working on construction of the Olympic venues. Exemptions also apply to certain non-UK residents working for broadcasters. But not everyone gets a break: those working on construction of the venues (UK residents and non-residents) will have to pay taxes just as always.

Many of the athletes at the Olympics work at something other than their sport for a living. But those that compete professionally – like our American basketball team and many of the world’s best soccer (er, football) players – were especially concerned about forfeiting taxes in order to compete in the Games. Now, they don’t have to.

I’m a big sucker for the Olympics and I will definitely be watching the Games this year (in fact, I’m watching fencing – fencing! – as I post this piece). This year, it’s even more meaningful for me as a mom of two little girls since the 2012 London Olympics are the first Olympic Games in which every nation in attendance has had at least one female athlete. Nothing, it appears, will slow down these games: not gender, not religion, not Lord Voldemort and especially not taxes.

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I though the Olympics was for amateurs and no one gets paid for the events. How would England tax these athletes who aren’t getting paid? Do you mean to say that if I earn my money as a lawyer in America, and I visited London and for a few minutes discussed legal issues with someone, then I’d be taxed on part of my American income (based on the percentage of time I engaged in legal work in England) even though I didn’t charge for any legal work in London (which I couldn’t do as I’m not licensed there)? How is that possible? I guess it’s a law, but really – they would tax someone for engaging in a sport in London for no fee based on the fact that they would later charge a fee in another country?

The Olympics is no longer for amateurs (Kobe Bryant and LeBron James, for example, will be making an appearance). Some Olympians are very definitely paid for showing up: Speedo paid Phelps $1million for breaking Spitz’ record in Beijing. Many other athletes have similar deals. Additionally, many countries, including the US, pay their athletes to win medals: The U.S. pays American medal winners $25,000 for gold, $15,000 for silver, and $10,000 for bronze medals (http://www.moneyunder30.com/how-much-do-olympic-athletes-earn-unless-youre-michael-phelps-not-enough). And yes, if you are “doing business” in the UK (whatever that means), your income could theoretically be taxed – just as the US taxes those who do business in our country whether you live here or not.

A good piece about tax incentives for Olympians. However, the tax concessions are hardly recent. Basically it appears that the IOC demands that when a country bids for the Olympics it commits to grant certain tax concessions, including exempting competitors from taxation. The tax concessions relating to the 2012 Olypmics were enacted into UK law in the Finance Act 2006.